Blog

The rise of mobility services

Posted on: 03 Mar 2017

Author: Marko Javonrik, General Manager

Have you ever asked yourself how our grandchildren and great-grandchildren will move around and what their world will look like? To be honest, the visions about the future of urban mobility can seem a bit like science fiction. But is the disruption of mobility as we know it really that far away? In reality, it will probably only take around 5 years until shared, connected, electric and autonomous mobility becomes mainstream. There are already many initiatives and start-ups working to disrupt the traditional way of how we consume transportation. An increasing number of people living in densely populated areas is starting to realize that there should be a smarter, more sustainable way to satisfy their mobility needs. But how do we change old habits? And how can the new inventions be connected into a truly holistic mobility system that can fundamentally change the current outdated approach and drive the benefits that are so badly needed by the cities and its citizens?

The answer lies in the consumption of mobility services. When people are coming together to satisfy their mobility needs on-demand and using shared assets, the burden on the infrastructure in urban areas can be eased and vehicles can be utilized more efficiently. The real advantages of mobility innovation result from a dramatic reduction of the share of privately owned vehicles and then distributing the demand across other transportation alternatives so people can book different vehicles for every trip depending on their individual requirements. An important step thereby is to move the journey from the physical to a digital environment in which such integration can be delivered almost instantly and seamlessly. Instead of owning a car, people will have a digital traveler profile and start every journey in digital space. Today this is done with smartphone apps, tomorrow it might be chat-bots and in a few years it could be that most of the journeys are actually predicted in advance by the system and actually require no interaction at all. Today, people have the choice between owning a car which is always available when they need it, and relying on scheduled public transportation, cycling and walking in between. Currently, mobility services are only bridging a niche gap between public and private transportation; in the future, however, this will actually turn into a new digital mobility ecosystem together with integrated public transportation and a wider variety of available vehicles. These changes will happen much faster than people expect because of the synergies of many different inventions, and they will happen in a largely non-linear fashion. The key to a successful Mobility-as-a-Service ecosystem is an excellent user experience on the one hand and an appealing value proposition on the other. Afterwards, a lot of hard work and incentives are required to change the behavioral habits. As with every two-sided marketplace, the digital mobility system will also require massive upfront investments and exploration, but once it reaches the tipping point, the platform becomes more valuable simply by more entities joining on both sides of the market-place. And the tipping point is within reach even with the currently available digital technology innovation, it’s really just about putting the components together and getting the traction on the market. That’s easier said than done, though.

Digitalization is the main driver of change and a major enabler of innovation in mobility and transport models. It is revolutionizing the traditional business landscape by delivering agile digital business models and opening the doors to new revenue streams. This also applies to the mobility and transportation sector. There will be a completely new market structure with new and existing players aligning in a digital API economy ecosystem instead of the traditional value chains in which they used to exist. Therefore, it is crucial for the success of all involved stakeholders to find a suitable business model which lets the players reap the benefits of a smart mobility system and incentivizes them to drive change further. What is becoming clear is that it will not be just a simple aggregator model – the market is simply too large and too strategically important to have a single “Netflix” to play all the movies.

The process of how to find the suitable business model for all players will be the topic of the next Blog on Mobility Services. Stay tuned.